President Nana Addo Dankwa Akufo-Addo has bemoaned the proliferation of ‘fictionalised’ banking institutions which he also described as “glorified ponzi schemes” under the Mahama-led National Democratic Congress (NDC) administration.
He said his administration had to clean-up the messed-up banking and the financial sector under the supervision of the previous government.
“If truth be told, many of the finance houses were running what can only be called glorified ponzi schemes, and had lured many depositors into these schemes. We were in a desperate situation, and urgent, radical measures had to be taken to prevent the collapse of the entire financial and banking sector.
“Mr. Speaker, there are painful lessons that we all have to imbibe from this debacle,” President Akufo-Addo told Parliament.
He stated these at the last message on the State of the Nation yesterday in his first term in office, in accordance with Article 67 of the 1992 Constitution.
Article 67 states that “the President shall, at the beginning of each session of Parliament and before a dissolution of Parliament, deliver to Parliament a message on the state of the nation”.
President Akufo-Addo’s message was ahead of his inauguration and swearing-in for his next four-year administration as well as the dissolution of the current seventh Parliament
He pointed out that, “Probably, the most difficult problem the government met on coming into office was the state of the banking and financial sector. Many of our banks were in distress, and had been kept on unsustainable and artificial life support by the Central Bank. The supervisory agencies were, unfortunately, not performing their duties, and the governance and management structures of many the banks were clearly not adequate”.
He noted that the Bank of Ghana (BoG), under new leadership, intervened, and has restored sanity to the sector.
President Akufo-Addo said government, has in the process, saved the banks involved and 4.6 million depositors’ funds.
“The government has had to find some twenty-one billion cedis (GH¢21 billion) to fund the cleaning up exercise. This exercise has enabled a more robust financial and banking services sector to emerge, the better to finance the rapid development of our nation.
Ghana’s economy stabilised
President stated that his government has been able to stabilize the economy within the last four years.
He said his government inherited a bad economy although the country was still under the International Monetary Fund (IMF)- sponsored bailout programme.
“The basic facts of our unhappy inheritance are well-documented – 15.4% rate of inflation; a 9.3% fiscal deficit; 32% rate of interest; a 3.4% rate of GDP growth, the lowest in two decades – all under an IMF-sponsored bailout programme.
He reiterated that although the economy was in a bad state when he assumed office, his government was able to work to get the economy stabilized.
President Akufo-Addo added that Ghana exited the International Monetary Fund bailout programme successfully under his governance.
“We set to work quickly, and, I am glad to say that, we have been able to stabilize the economy, exit satisfactorily the IMF programme, and restore confidence in the economy.”